DBRS Confirms All Classes of MSJP 2015-HAUL Mortgage Trust

DBRS Limited (DBRS) confirmed the ratings on the Commercial Mortgage Pass-Through Certificates, Series 2015-HAUL issued by MSJP 2015-HAUL Mortgage Trust as follows:

-- Class A at AAA (sf)
-- Class X-A at AAA (sf)
-- Class X-B at AA (high) (sf)
-- Class B at AA (sf)
-- Class C at AA (low) (sf)
-- Class D at A (sf)
-- Class E at BBB (low) (sf)

All trends are Stable.

The rating confirmations reflect the continued stable performance of the transaction, which consists of a $170.0 million trust loan secured by the fee simple interest in a portfolio of 105 self-storage properties totalling 32,519 units and 2.7 million rentable square feet (sf) across the United States. Each property is owned and operated under the U-Haul brand and features a minimum of 89 units to a maximum of 958 units. The properties are situated across 35 states and were constructed between 1902 and 2003.

This loan is sponsored by AMERCO, the parent company of U-Haul. AMERCO is considered to be a strong sponsor because of its extensive experience in the self-storage industry and ample financial means. There is no limit on the guaranty executed with AMERCO.

The $254.3 million whole mortgage loan consists of six separate notes: A-1A, A-1B, A-2A, A-2B, A-3A and A-3B. The A-1A and A-1B notes, which total $84.3 million, are companion loans and were not contributed to the trust. The whole loan has a 20-year term and amortizes on a 20-year schedule, wherein principal is first applied to the non-trust companion loans before being applied to the trust notes. As a result, the trust notes are currently interest only (IO) and do not amortize until year 11 of the loan term. The DBRS analysis is based on the whole loan amount and an amortizing debt service figure.

At YE2017, the amortizing debt service coverage ratio (DSCR) was 1.96 times (x), with a debt yield of 16.9%, compared with the DBRS Term DSCR and DBRS Debt Yield at issuance of 1.18x and 9.2%, respectively. Since issuance, the loan has been reporting significantly higher income for the portfolio as compared with the issuance figures. DBRS believes this is likely due to truck rental income that is included in the reported other income for the portfolio that was not considered in DBRS’s analysis at issuance. When adjusting the reported other income figure using the same approach DBRS used at issuance, DBRS estimates that the DSCR is approximately 1.35x based on the real estate operations. Revenue from storage rents have increased from issuance. The portfolio’s Q1 2018 occupancy rate of 88.0% is consistent with the YE2017 occupancy rate of 87.0% but down slightly from 92.6% at issuance. DBRS expects performance of the portfolio to remain stable given the growth in rental rates and the diversity of locations within the portfolio.

Classes X-A and X-B are IO certificates that reference a single rated tranche or multiple rated tranches. The IO rating mirrors the lowest-rated applicable reference obligation tranche adjusted upward by one notch if senior in the waterfall.

All ratings will be subject to ongoing surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed or discontinued by DBRS.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is CMBS North American Surveillance, which can be found on dbrs.com under Methodologies. For a list of the Structured Finance related methodologies that may be used during the rating process, please see the DBRS Global Structured Finance Related Methodologies document on www.dbrs.com. Please note that not every related methodology listed under a principal Structured Finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info@dbrs.com.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.